Outsourcing a person isn’t the same as outsourcing the work

When an accountant who has never set foot in Australia can take an unfair dismissal claim to the Fair Work Commission, it’s time for firms to look hard at how they outsource, writes Viral Kanabar.

That’s the upshot of a recent decision involving a Philippines-licensed CPA who worked remotely for Sydney-based online retailer BikesOnline Australia for around eight years – first as a bookkeeper engaged through Upwork, and later as a senior accountant under contractor agreements. When she was dismissed, the business argued she was an independent contractor working offshore and outside the commission’s reach.

Deputy president Gerard Boyce disagreed. The company set her working times and directed her tasks. She had annual performance reviews and needed approval to take leave. Her invoices simply reflected the hours on her timesheet. And her most recent agreement was made in Australia and governed by NSW law. In substance, he found, she was an Australian-based employee, and her claim can proceed.

The merits of the claim are yet to be heard, and I won’t speculate on them. But the commission’s reasoning deserves a close read by every practice that has built an offshore team one seat at a time.

The seat model’s blind spot

Much of the profession’s outsourcing over the past decade has followed a simple formula. Find a capable person offshore – directly, through a platform or through a provider – and manage them as if they were sitting in the office. Allocate their jobs, set their hours, approve their leave, run their reviews.

It feels efficient. It is also, almost point for point, the pattern of control the commission looked at in deciding this was employment rather than contracting. What a contract is called matters less than how the relationship works day to day.

I’m not a lawyer, and firms with existing arrangements should get proper employment advice. But there is a simpler commercial question every partner can ask: if my firm is directing an offshore worker’s day, approving their leave and managing their performance, have we outsourced anything at all – or have we just moved a desk?

The legal question is only part of the picture. A seat leaves the firm carrying the same risks it carries with local staff. Someone has to train them on your software and processes. Someone has to cover their leave and sick days. And when a trained team member moves on after six months, their knowledge leaves with them and the firm starts again. Partners who outsourced to win back time end up managing people in another time zone instead.

3 pillars for the practice of the future

This matters well beyond one case, because outsourcing is no longer optional for most firms. Fewer graduates want to become accountants, local salaries keep rising, and partners are planning succession. The accounting and advice practices that thrive over the next decade will rest on three pillars: people and culture, the right tech stack, and structured outsourcing.

People and culture keep good staff and clients. The tech stack lets a firm do more, faster and with fewer errors. The third pillar is the one most firms get wrong, and the word that matters is structured. Outsourcing that depends on an individual the firm has to direct, with no defined process, no agreed turnaround and no independent review, isn’t structured. As this case shows, it can also carry risks the firm never priced in.

When all three pillars are in place, the result is a more efficient practice: work flows through documented processes, costs are predictable, and partners spend their time on clients rather than the back office. That efficiency is also easy to demonstrate, which is where it pays off in mergers and acquisitions.

Firms are being bought and merged every month. Acquirers look for clean data, consistent processes and a cost base that can scale with each deal. A firm whose back office runs on defined workflows, measured turnaround times and reviewed output can show a buyer exactly how work gets done. It has less key-person risk, fewer surprises in due diligence and an easier path to integration. That makes it a more attractive target and a stronger acquirer. A firm whose offshore capability is a handful of individually managed seats has more to explain.

Buy the outcome, not the person

There’s another way to outsource, and it starts with a different question. Not “who can we hire?” but “what work needs to be done, by when, and to what standard?”

In a managed service, the firm hands over the job – an SMSF annual return, a set of financials, a BAS – rather than a person to supervise. The provider employs, trains, rosters and manages its own people. Turnaround times are agreed up front and tracked in a shared workflow, so the firm can see where every job is. And before anything comes back, it’s reviewed by a senior manager with years of technical experience.

That’s how we have worked at SuperRecords for 15 years. Our clients’ relationship is with the work and the result, not with an individual they need to direct. Leave, illness and turnover are ours to manage, not theirs. Because many of our people have been with us for five years or more, the knowledge stays in the team rather than walking out the door.

5 questions to ask before you outsource

1. Who directs the work day to day – your firm or the provider?
2. Who approves leave, manages performance and absorbs staff turnover?
3. If the person doing your work leaves tomorrow, what happens to the job?
4. Is there an agreed turnaround time, and can you see progress against it?
5. Who reviews the work before it reaches you, and how experienced are they?

If most of the answers point back to your own firm, you’re running a remote team, with the obligations that come with it. That may suit some practices. But it isn’t what most partners had in mind when they decided to outsource.

The point of outsourcing was never to manage more people. It was to get quality work done, on time, so partners can focus on their clients and the growth of their firm. If your current model has you managing a person rather than receiving a result, this decision is a timely prompt to rethink it.

Viral Kanabar is the founding director of SuperRecords.

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